I am a businessman. What documents will I need for a home loan?
Bhim Singh, Ghaziabad
Banks will require documents regarding proof of income, identity and residence. In case of a home loan to a self-employed individual, his income tax (I-T) returns filed will be extremely important, as they will be the basis for calculating his loan eligibility. This will also have to be backed up with proof, such as copies of the last three years’ I-T returns (along with copies of computation of income/annual accounts, if any) and copies of the last 24 months’ statements of all active bank accounts in which the salary/business income details are reflected.
For a self-employed person, if the income has increased dramatically in the past year, it is advisable to have an explanation ready as to why you think this is a permanent increase in your income and not just a one-time aberration, which may disappear in the future.
If the bank is convinced with the explanation, then the loan eligibility can be considered on the basis of the latest income rather than on the much lower average income.
Proof of age can come from any of these: school-leaving certificate, driving license, passport, ration card, PAN card or voter I-card. Most of these can also serve as proof of residence. As identity proof, you can submit any of the above-mentioned documents that have your photograph. A document that has your photograph, current address and the correct age can be proof for all the three things. Proof of investments can also help the bank estimate your ability to pay the down payment as well as your saving habit.
